Definition Accounts Receivable Financing. Description.

Accounts Receivable Financing is obtaining funds via a
loan by using a company's accounts receivable as a collateral. Normally,
the company that "sells" its accounts receivable receives less than the full
amount for the money owed on the accounts.

The main benefit of this approach is that the funds are obtained
now rather than later. But credit risk is not eliminated.

This form of financing uses accounts receivable as collateral
for a loan. This is different than factoring in that the party providing the
financing does not own the invoice and is not responsible for collecting the
debt.